Since 2009, the US economy has lived in a post credit boom world. Poor productivity, private sector deleveraging and (relatively) slow job growth have been at the heart of this economic expansion. The Fed's response, as is well known, has been extremely loose monetary policy (i.e. QE & ZIRP). As is typical following a 'credit bust', capital has migrated away from the low yielding currency of the slower growing/deleveraging economy (in this case away from the US economy & the US dollar). That capital has found its way into faster growing economies with higher yielding currencies (in this case China & other emerging markets) - e.g. see chart below. The 'debt parcel' has therefore been passed from West to East and, with that, China and other Asian economies have had credit booms (we lay out the mechanics of that in last month's Longview Letter No 86 Pass the Debt Parcel - Part II)...Please see our website for the rest of this blog: (VIEW LINK)